Glasgow coal deal a ‘clear sign’ of global energy shift: AGL

Loading

Financially, the pace of the clean energy shift has also been hurting AGL and other traditional power suppliers. A significant uplift in wind and solar power across Australia’s east-coast energy grid has been driving daytime wholesale electricity prices to levels where large fossil fuel-based generators are increasingly unable to compete.

The company, which sunk to a $2.06 billion full-year loss in the 12 months to June 30, said the “winds of change” had swept the market much faster than anticipated and is now embarking on plans to split up the business.

Under a proposed demerger, AGL plans to form a new company, Accel Energy, to own its fleet of huge coal- and gas-fired generators. The other, to be called AGL Australia, will hold its electricity, gas and telecommunications retailing business along with some cleaner generation assets.

By creating AGL Australia, which would have a “net-zero” carbon footprint, the board hopes to appeal to equity investors and lenders that are increasingly exiting coal assets as part of efforts to reduce exposure to the risks posed by global warming.

Mr Brokhof said the demerger should enable AGL’s market value to better reflect the company’s significant investments in renewable energy including through its 20 per cent interest in PowAR, the nation’s largest operator of wind and solar farms.

“We have … invested billions of Australian dollars in renewables over time, and this has never been reflected in our share price,” he said. “Our share price has suffered over the last 18 months.”

AGL insists the demerger will also be beneficial for Accel, as it would permit a greater focus on the responsible operation of its assets and their transition to lower-carbon energy “hubs”, which may eventually include big batteries, hydrogen manufacturing and carbon capture and storage projects.

The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.